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$6 bn Real Estate Equity Deals for Indian Realty


$6 bn Real Estate Equity Deals for Indian Realty

Last updated: June 6 2007
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  • $6 bn Real Estate Equity Deals for Indian Realty

    This one - a big one - was posted at Indian Reality News today:

    $6 bn Real Estate Equity Deals for Indian Realty
    14:47 6/6/2007, Indian Realty News, foreign direct investment in india, India Realty News

    One-fifth of the Real Estate Equity deals worth $30 billion planned for Asian markets will find its way to Indian real estate. However, the amount is believed to be less than what it has been earmarked for Japan and China.

    An estimated $10 billion foreign investment is likely to enter the Indian real estate in the next 1-2 years. Taking a look back at 1990s, the inflow of foreign direct investment into the market was estimated to be at $2-3b billion a year. It was recorded to be $5.6 billion, and reached its peak in 2005-06 at $7.2 billion.

    Major foreign private equity players are eager to tap Indian realty. The list includes prominent names of Goldman Sachs, Morgan Stanley, JP Morgan, Blackstone Group.

    Morgan Stanley has recently closed a deal worth about $150 million with Oberoi Constructions in Mumbai. Meanwhile, the Nakheel Group in Dubai signed a deal worth $10 billion with DLF for development of residential projects in Tier-I and Tier-II cities.

    There are several reasons encouraging foreign investors to look towards India. Strong commercial property yields across metros, the high capital and rental value appreciation and the availability of quality supply are some of the major factors attracting investors.

    The growth of Indian Realty has actually been fuelled by a high proliferation of IT/ITes, and banking, financial services and insurance (BFSI). The growth rate of the retail market is expected to be around 35%, with organized retailing currently at a mere 3%.

    Around 94% of capital investment in real estate is being deployed in tier I cities of Delhi, Mumbai, and Bangalore. There is a lower risk associated with the investments made into these cities in terms of developers and occupiers.

    Total investments in Tier-I cities is expected to increase in the wake of the growing demand in these locations over the next two to three years, says Abhishek Kiran Gupta, senior manager, research, JLL.

    How will this impact the industry?
    Manoj Misra

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